Travelling expenses and Foreign Currency

[Omeir]

I have two queries. One is related to traveling expenses. We have foreign and domestic travels, for domestic travels recording is no issue because everything is in rupees. However in the case of foreign travel, we get receipts in different currencies. My question is how should we record them? Which date's exchange rate is to be applied and which one; buying or selling?

The second question is related to the purchase of Foreign Currency. For traveling we buy USD for e.g. Now if we bought $100 for 85 so we will record 8,500. Now we have used only $50. At the end of the year how will the $50 be reflected in the books. Now the exchange rate can either be 80 or 90.Should we pass a general entry to record the fluctuation in the exchange rate.

Thanks for the help

[Omeir]

Replies awaited.

[noman]

For 2nd query..

yes you will record the entry for change in excange rate..

you will re-measure the 50$ to the rate prevailing at balance sheet sheet date..

now the 50$ will appear as Rs.4,250 (@85)

in case of exchange rate increase to 90...the new value would be Rs.4,500
the entry will be as follows
Cash & Bank (dollar account) Dr. 250
To Exchange Gain Cr. 250


in case rate decrease to 80...the new value would be Rs.4,000
the entry will be as follows
Exchange Loss Dr.250
Cash & Bank Dollar Cr.250



In case of your 1st query.......more information is needed..

is advance given to foreign travelling employees?? or they expend the money and you reimburse them?

when is the expense recorded in your books?? when the employee returns or when you give advance??

[Omeir]

Thanks a lot for the clarification.

the employee spends on his own and the company reimburses on providing expense details and evidence.
when the receipts are received the expense is recorded.

[noman]

does the company reimburse in Rs or in $?

[Omeir]

Rs

[noman]

u dont need to record foreign currency transaction....just record the Rs. payment as expense...

[spoc]

<i>My question is how should we record them? Which date's exchange rate is to be applied and which one; buying or selling?</i>
You can have agreed and fixed internal average rate in company, so use it in case.
Was examples when was used date, when expenses were done, if not agreed that will be used date/rate last item in expenses sheet in case bulk income. Check your bank rate or use World Bank rates for date applied for item in expenses sheet. Make search in internet, if will not find usable send me request.[8D]
Also you can ask employee to provide rate proved document.
By the way each item in bulk - expenses sheet - should have proof document receipt, bill or any other proved document.

<i>The second question is related to the purchase of Foreign Currency.</i>
At the end of each month check rate changes and make record to increase or decrease values on expenses account, we are using special defined Over&under Exchange Rate Estimation account.